Information Technology and Economic Growth in the U.S. and ...€¦ · Information Technology and Economic Growth in the U.S. and Japan By Dale W. Jorgenson (Harvard University) Koji

Information Technology Information Technology and and

Economic Growth Economic Growth in the U.S. and Japanin the U.S. and Japan

By

Dale W. Jorgenson (Harvard University)

Koji Nomura (Keio University)

Economic and Social Research Institute, International Collaboration Projects Meeting,

February 15-16, 2005, Tokyo, Japan

Economic Growth Economic Growth in the Information Agein the Information Age

The Information Age:Faster, Better, Cheaper!

Role of Information Technology: IT Prices and the Cost of Capital

IT and Economic Growth in the U.S. and Japan: IT Investment and Productivity Growth

Economics on Internet Time:The New Research Agenda

The Information Age:The Information Age:Faster, Better, Cheaper!Faster, Better, Cheaper!

Moore’s Law: The number of transistors on a chip doubles every 18-24 months(Pentium 4, released November 20,2000, has 42 million transistors).

Moore (1998): "If the automobile industry advanced as rapidly as the semiconductor industry, a Rolls Royce would get half a million miles per gallon, and it would be cheaper to throw it away than to park it."

Invention of the Transistor:

Development of Semiconductor Technology.The Integrated Circuit:

Memory Chips; Logic Chips.

Source: No Exponential is Forever, Gordon Moore ftp://download.intel.com/research/silicon/Gordon_Moore_ISSCC_021003.pdf)

Holding Quality ConstantHolding Quality ConstantMatched Models and HedonicsMatched Models and Hedonics

Software: Prepackaged, Custom, and Own-Account.

Semiconductor Price Indexes:Memory and Logic Chips.

Computer Price Indexes:The BEA-IBM Collaboration.

Communications Equipment:Terminal, Switching, and Transmission.

Relative Prices of Computers and Semiconductors, 1977-2000

0.01

0.1

1

10

100

1000

1977 1980 1983 1986 1989 1992 1995 1998

Computers Memory Logic

Log

Scal

e (1

996=

1.0)

All price indexes are divided by the output price index.

95 97 99 02 05 08 11

1994 NTRS

1997 NTRS

1998 / 1999 ITRS

Min

imum

Fea

ture

Siz

e (n

m)

(DR

AM

Hal

fPi

tch)

500

350

250

180

130

100

70

50

35

2595 97 99 02 05 08 11

92

92

1992 NTRS

International SEMATECH

Area for Future ITRS Acceleration

Semiconductor Roadmap Acceleration

95 97 99 02 05 08 11

1994 NTRS

1997 NTRS

1998 / 1999 ITRS

(DR

AM

Hal

fPi

tch)

500

350

250

180

130

100

70

50

35

2595 97 99 02 05 08 11

92

92

1992 NTRS

International SEMATECH

Area for Future Acceleration

2001/2003 ITRS*

*Note the 2003 ITRS timing is unchanged from the 2001 ITRS

Relative Prices of Computers, Communication Equipment, and Software, 1977-2000

0.1

1

10

100

1977 1980 1983 1986 1989 1992 1995 1998

ComputersCentral Office Switching EquipmentPrepackaged Software

Log

Scal

e (1

996=

1.0)

All price indexes are divided by the output price index.

Role of Information Technology:Role of Information Technology:IT Prices, Investment, and ProductivityIT Prices, Investment, and Productivity

Capital Contribution by Type:

Computers, Communications Equipment, and Software.

Input Shares of IT:

Computers, Communications Equipment, and Software.

Capital Contribution:

IT versus Non-IT Capital Services.

IT Capital Stock in Japan

0.0

0.2

0.4

0.6

0.8

1.0

1960 1965 1970 1975 1980 1985 1990 1995 2000Computers Communication EquipmentCustom Software Packaged SoftwareOwn Account Software

Real composition of total IT capital stock (1995 price).

Shar

e (%

)

Capital Input Contribution of Information Technology in the U.S.

0.0

0.5

1.0

1.5

2.0

2.5

1977-1990 1990-1995 1995-2000

Non-IT Capital IT Capital

Average annual percentage growth rates, weighted by income shares.

Ann

ual C

ontri

butio

n (%

)

Capital Input Contribution of Information Technology in Japan

0.00.51.01.52.02.53.03.54.04.5

1960-1977 1977-1990 1990-1995 1995-2000

Non-IT Capital IT Capital

Average annual percentage growth rates, weighted by income shares.

Ann

ual C

ontri

butio

n (%

)

IT Capital Input Contribution in Japan

0.0

0.1

0.2

0.3

0.4

1960-1977 1977-1990 1990-1995 1995-2000Computers Communication EquipmentCustom Software Packaged SoftwareOwn Account Software

Average annual percentage growth rates, weighted by income shares.

Ann

ual C

ontri

butio

n (%

)

Industry Capital Input Contributionsin the U.S., 1977-1995

-0.1 0.0 0.1 0.2 0.3 0.4

Coal MiningNon energy Mining

Education, privateAgriculture

Petroleum RefiningPrimary Metal

Lumber, Wood, FurnitureRubber and Plastic

Textiles, Apparel, LeatherStone, Clay, Glass

PaperMotor Vehicles

Computers and Office EquipmentConstruction

Fabricated MetalOther Electrical Mach

Communications EquipmentOther Transportation Equipment

GasFood and Tobacco

Government EducationElectronic Components

LegalOil and Gas Mining

ChemicalsTransportation

Instruments and Miscellaneous Manuf.Other ServicesHealth private

Printing and PublishingGovernment Enterprises

ElectricityMachinery excl. Computers

Real Estate (rental)Insurance

Retail and EatingComputer Services

Government excl. EducationProfessional and Social Svcs

CommunicationsBusiness Svc excl. Computer

Wholesale TradeFinance

Household

Non-IT CapitalIT Capital

Note: Industries sorted by IT Capital contribution

Industry Capital Input Contributionsin the U.S., 1995-2000

-0.1 0.0 0.1 0.2 0.3 0.4 0.5

Petroleum RefiningCoal Mining

Non energy MiningEducation, private

Other Electrical MachPrimary Metal

AgricultureTextiles, Apparel, Leather

PaperLumber, Wood, Furniture

Stone, Clay, GlassMotor Vehicles

Oil and Gas MiningGas

Rubber and PlasticComputers and Office

ElectricityFabricated Metal

Other Transportation EquipmentFood and Tobacco

Government EducationElectronic Components

Communications EquipmentConstruction

ChemicalsInstruments and Miscellaneous

Health privateLegal

Other ServicesGovernment Enterprises

Machinery excl. ComputersPrinting and Publishing

TransportationInsurance

Retail and EatingReal Estate (rental)Computer Services

Government excl. EducationCommunications

Professional and Social SvcsBusiness Svc excl. Computer

Wholesale TradeFinance

Household

Non-IT CapitalIT Capital

Note: Industries sorted by IT Capital contribution

Industry Capital Input Contributionsin Japan, 1960-1977

-0.1 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8

Leather Products Coal Products

Woods and Related Products Water Supply

Furniture and Fixture Storage Facility Service

Coal Mining Rubber Products

Other Mining Textile

Apparel Air Transportation

Precision InstrumentsRailroad Transportation

Real EstateGas Supply

Stone, Clay, GlassPetroleum Refining

Road TransportationOther Manufacturing

ResearchNon-ferrous Metal

Printing and PublishingMetal Products

HouseholdComputersEducation

FoodsCommunications Equipment

Paper and Pulp Agriculture, Forestry, Fishery

Water TransportationMachinery excl Computers

Medical CareMotor Vehicles

Construction Other Transportation Equipment

Chemical ProductsElectricity

Electronic ComponentsIron and Steel

Public AdministrationWholesale and Retail

Other Electrical MachFinance and Insurance

CommunicationsOther Service

Non-IT CapitalIT Capital

Note: Industries sorted by IT Capital contribution

Industry Capital Input Contributionsin Japan, 1977-1995

-0.1 0.0 0.1 0.2 0.3 0.4 0.5 0.6

Water TransportationCoal Mining

Other Mining Leather Products

Woods and Related Products Furniture and Fixture

Coal Products Water Supply

Rubber Products Apparel

Other Transportation EquipmentPaper and Pulp

Air TransportationTextile

Storage Facility Service Stone, Clay, Glass

Non-ferrous Metal Petroleum Refining

Gas SupplyAgriculture, Forestry, Fishery

Real EstateResearch

Iron and SteelMetal Products

Communications EquipmentPrecision InstrumentsOther Manufacturing

FoodsEducation

Railroad TransportationMotor Vehicles

Road TransportationPrinting and Publishing

Machinery excl ComputersMedical Care

Chemical ProductsComputers

Construction Electricity

Other Electrical MachElectronic Components

HouseholdWholesale and RetailPublic Administration

CommunicationsFinance and Insurance

Other Service

Non-IT CapitalIT Capital

Note: Industries sorted by IT Capital contribution

Industry Capital Input Contributionsin Japan, 1995-2000

-0.1 0.0 0.1 0.2 0.3

Textile Furniture and Fixture

Coal Mining Leather Products

Woods and Related Products Other Mining

Metal ProductsCoal Products

Storage Facility Service Apparel

Agriculture, Forestry, Fishery Air Transportation

Other Transportation EquipmentRubber Products

Paper and Pulp Non-ferrous Metal

Iron and SteelWater Supply

Stone, Clay, GlassGas Supply

ResearchEducation

Water TransportationPrecision Instruments

Petroleum RefiningMachinery excl Computers

ComputersMotor Vehicles

Road TransportationReal Estate

Other ManufacturingCommunications Equipment

FoodsPrinting and Publishing

ElectricityRailroad Transportation

Chemical ProductsMedical Care

Other Electrical MachConstruction

Electronic ComponentsWholesale and RetailPublic Administration

CommunicationsHousehold

Finance and InsuranceOther Service

Non-IT CapitalIT Capital

Note: Industries sorted by IT Capital contribution

0.00

0.50

1.00

1.50

2.00

2.50

3.0019

80-1

990

1990

-199

5

1995

-200

0

1981

-199

0

1990

-199

5

1995

-200

0

1980

-199

0

1990

-199

5

1995

-200

0

1980

-199

0

1990

-199

5

1995

-200

0

1980

-199

0

1990

-199

5

1995

-200

0

1980

-199

0

1990

-199

5

1995

-200

0

1980

-199

0

1990

-199

5

1995

-200

0

US Canada UK France Germany Italy Japan

Ann

ual C

ontr

ibut

ion

(%)

Non-IT IT

Capital Input Contribution of Information Technology by Country